An Appropriation from Free Cash (account 01-324001) in the amount of $560,000 to the City Stabilization fund (#8401).
Agenda original PDF
Minutes original PDF
D. (ID # 2026-1242): An Appropriation from Free Cash (account 01-324001) in the amount of $560,000 to the City Stabilization fund (#8401). Motion to Approve made by Councilor Chen Seconded by Councilor Karamcheti All were in favor and motion passed RESULTS: ACCEPTED [UNANIMOUS] TO: City Council AYES: Jason Chen, Cal Finocchiaro, Bradley Freeman, Manjula Karamcheti, Elizabeth Kowal, John Obremski, Christopher Park, Devin Romanul, Kim Vandiver, Ryan Williams NAYS: None ABSENT: Maya Jamaleddine Kerri Golden, CFO, explained that every year, as part of free cash, we try to recognize an amount and put it into our stabilization funds. This year the request is just to the General Purpose City Stabilization Fund, and the target for this is to have it be 5% of the operating budget. This fund is very restrictive and is used for natural disaster incidents or cases when state revenues are cut or real anomalies. VIII. ADJOURNMENT Motion to Adjourn by unanimous consent made by Chair Romanul at 8:41 PM All were in favor and meeting was adjourned 9 10 CITY OF MELROSE
Transcript
▶ 2:22:28 Speaker 2: Vice Chair Vandiver? Yes. Councilor Chen. Yes. Councilor Finocchiaro. Yes. Councilor Karamcheti. Yes. Councilor Kowal. Yes. Councilor Abramsky. Yes. Councilor Park. Yes. Councilor Williams. Yes. President Freeman. Yes. Chair Romanul.
▶ 2:22:42 Devin Romanul: Yes. All in favor. All right. All in favor, that passes, and we'll move that to our next full council meeting. Thank you very much. Finally, our thank you both so much for- ... joining us this evening. Finally, our last item on our Appropriations and Oversight Committee meeting is ID number 2026-1242, an appropriation from free cash in the amount of $560,000 to the City Stabilization Fund.
▶ 2:23:03 Speaker 4: Thank you. So this is, every year as part of free cash, we try to recognize an amount and put it into our stabilization funds. So this year, the request is just to the general purpose city stabilization fund, which the target for this, aiming to have a 5% of the operating budget. And so currently, the balance is just under $4.7 million. And if this is approved, it would bring it to just under 5.3. It would be 5,256,000. And so as part of free cash, like last year, we looked at different funds, and I think I sent out balances a couple months ago that just kind of showed the target for each fund. And so this was the one that I'd like to start making investment in.
▶ 2:23:58 Devin Romanul: Perfect. First, I have Councilor Williams.
▶ 2:24:01 Ryan Williams: What, in your estimation, would be the appropriate expenses to cover from the General Stabilization Fund?
▶ 2:24:08 Speaker 4: So this is very restrictive. This is like a natural disaster, something significant happening at the state level where revenues are significantly cut or something. But this would be... Yeah. I think it's defined. I don't have the definition in front of me, I'm sorry, but it's like a natural disaster or like a real anomaly.
▶ 2:24:32 Speaker 10: Thank you.
▶ 2:24:33 Devin Romanul: Yep. Next I have Councilor Finocchiaro, and then Councilor Chen.
▶ 2:24:36 Cal Finocchiaro: Thank you. I'm very happy to see that we're putting money aside. Yes. But where does the 5% come from? Is that just your own number or?
▶ 2:24:46 Speaker 4: So DLS previously had had best practice of 5%. I think that they've kind of rolled back some of those recommendations. But I've always aimed I think 5% there, and then free cash 5% of the operating budget, so you get your 10% reserves. Mm-hmm. And then on top of that, we have some other stabilization funds, but they're more restrictive as to what they can be used. But the combination of all those things get us to about 10%.
▶ 2:25:23 Cal Finocchiaro: Okay. Yeah. Because I would be a fan of even putting $1 million away. But if you feel like it's so restrictive that we wouldn't be able to pull... Because we essentially wouldn't be able to pull this money for- Right ... anything. Rue- Would that be more the Capital Stabilization Fund?
▶ 2:25:37 Speaker 4: Yes. So those are the special purpose. So capital would be like if something breaks- Mm-hmm ... then there's contract stabilization. There's suits and claims if there's ever a settlement where we would need to go for... And there's a couple other ones that are slipping my mind right now, but-
▶ 2:25:55 Cal Finocchiaro: So don't we have a General Stabilization Fund? That's it. This is it. So let's just say that the state pulled back and federal all funding. I don't know, just making up a... Would we pull it from this to pay for our bills?
▶ 2:26:08 Speaker 4: Yes, but then there has to be a plan to replenish it. And again, I talked about the rating agencies earlier. Mm-hmm. They look at all of this stuff as well, like planning for rainy days and- Okay ... all of that.
▶ 2:26:20 Cal Finocchiaro: I was gonna say, because if we were bumping it up even more, would that give us more of a better rating? Or is it kind of like they don't see it as that?
▶ 2:26:27 Speaker 4: They look at all of the funds as a whole. So, all those special purpose ones. Okay. I will say DLS, when they came in from the Finance Management Resource Bureau, they said that we kind of have a lot of stabilization funds. Mm-hmm. And so I might look to consolidate some of them with like purposes- Mm-hmm ... but still give us the flexibility. Mainly like the OSHA one. Mm-hmm. That, to me, would combine with capital. Yeah. That sounds-
▶ 2:26:55 Cal Finocchiaro: Yeah ... like something you would pull from there if it was an OSHA related issue.
▶ 2:26:59 Speaker 4: Yes. Yeah.
▶ 2:27:00 Speaker 7: All right. Thank you. Yep.
▶ 2:27:01 Speaker 1: Councilor Chen.
▶ 2:27:03 Jason Chen: Following Councilor Finocchiaro question, I think it is good that we have our 10%, and then we get all the benefits of it by having a good bond rating. And where, or which fund it goes into is less important because as long as it's a rainy day fund, and we need to... If we have one kind of disaster versus another, you can come in and ask us to reapportion it. Right. But we have that pile of money, and we're getting the benefit from it. So I motion to
▶ 2:27:30 Devin Romanul: approve. Second. Motion to approve made by Councilor Chen, seconded by Councilor Karamcheti. On discussion, I have Councilor Park.
▶ 2:27:37 Speaker 9: Thank you. So you and I have had correspondence about stabilization funds and the questions I had. For everyone's benefit, we have 11 stabilization funds right now to date. My question is, I was actually looking for the current amount in each reserve, and it wasn't easy to find. So I know you had mentioned we're gonna be close to $5 million with this proposed $560,000. What are the other amounts for the other 10? You don't have to give me the exact amounts, but what is the total sum for all the stabilization funds that we have, and where could I find that?
▶ 2:28:19 Speaker 4: So I did provide balances maybe back in April. Mm-hmm. I think it might have been in conjunction with another appropriation request. Mm-hmm. And so those balances we get quarterly from our investment agency. Mm-hmm. But I'm happy to share that again and put it somewhere so that you can see those balances. But off the top of my head, I don't know the collective balance- Okay ... of all of them. Okay.
▶ 2:28:46 Speaker 1: Vice Chair Vandiver.
▶ 2:28:47 Kimberly Vandiver: The information from April, I believe the total is $13,086,000 and- Okay ... some additional.
▶ 2:28:56 Speaker 1: Councilor Finocchiaro.
▶ 2:28:57 Cal Finocchiaro: Sorry. Thank you. I just thought another question. So the money is invested in funds. Yes. So where it's gaining interest and money, and so- Yes ... is it fairly decent amount that there's a return on?
▶ 2:29:12 Speaker 4: The return, it's on prudent investor versus the legal list, or I'm saying it backwards. So it's very restrictive how you can invest those funds under Mass General Law. So it's pretty conservative because they view some of those funds as more of an operational cost. Yeah. Whereas OPEB is a long-term fund, and that is invested more aggressively under Mass General Law.
▶ 2:29:35 Cal Finocchiaro: They came in front of us when they were discussing the OPEB. Okay. Yes. Yeah, I was getting that confused. It was not the stabilization funds, it was the OPEB. Yeah. Right. Okay.
▶ 2:29:43 Speaker 4: Yes.
▶ 2:29:43 Speaker 7: All right.
▶ 2:29:44 Speaker 1: Any other comments?
▶ 2:29:45 Speaker 7: That's where they're accruing money. Yes.
▶ 2:29:47 Devin Romanul: Well, we have a motion on the floor, and seeing no other questions, Madam Clerk, will you please call the roll?
▶ 2:29:52 Speaker 2: Vice Chair Vandiver. Yes. Councilor Chen. Yes. Councilor Finocchiaro. Yes. Councilor Karamcheti. Yes. Councilor Kowal. Yes. Councilor Abrumsky. Yes. Councilor Park. Yes. Councilor Williams. Yes. President Freeman. Yes. Chair Romanul.
▶ 2:30:07 Speaker 1: Yes.
▶ 2:30:07 Devin Romanul: All in favor. All in favor. Thank you so much. That will go to our next full council meeting. Thank you. That being the last item on our agenda for this Appropriations and Oversight Committee, for those of you who bet on the over, enjoy your winnings. On that motion by unanimous consent to adjourn, seeing no objection, we are now adjourned.